Knights derive only from Noble Recruits, who are spawned weekly by towns, villages and castles owned by you. (how many, depends your Renown and Honor, the more chivalrous you are, the more noble recruits you will get each week) To find out whether you have any Noble Recruits open the “Reports menu” and check your Character Report which will tell how many noble recruits have joined your cause. These Noble Recruits have their own troop tiers and most importantly, the higher parts of the tiers will allow you to be able to induct them into a particular Knighthood Order that either you establish in your Town/Castle, or an existing one that’s already there in the Castle/Town you own. Note: That before any kind of Noble recruiting can be done, you will need the building called “Training Ground” built in your Town/Castle. It’s very important to remember that you can only recruit your nobles in a Town/Castle, YOU CANNOT, recruit any nobles if you only own a Village, so keep that in mind and get a castle/town quickly!
Once you have a training ground in a town or castle, talk to the steward there and in the War Room, say "View noble recruits". Each Noble recruit you "accept into your court" (next option if you have them) will cost you 500 denars. That's 500 denars per Noble Recruit, not 500 Denars for all.
You should get only one type of recruit, depending on the faction you have chosen allegiance too or based on the culture you choose if you went the “King” route in your game.
- Sarleon: Sarleon Nobleman (upgrades to Sarleon Squire-at-arms -> Sarleon Knight)
- Ravenstern: Ravenstern Nobleman (upgrades to Ravenstern Squire-at-Arms -> Ravenstern Knight)
- D'Shar: D'Shar Nobleman (upgrades to D'Shar Noble Raider -> D'Shar Noble Cavalry)
- Fierdsvain: Fierdsvain Noblewoman (upgrades to Fierdsvain Sword Maiden -> Valkyrie)
- Empire: Empire Nobleman (upgrades to Empire Light Cavalry -> Empire Horseman or Empire Noble Legionnaire Recruit -> Empire Knight)
- Pendor: Pendor Nobleman (upgrades to Pendor Squire-at-Arms -> Pendor Knight -> Pendor Grey Archer or Pendor Foot Knight
This is point three of the CAQ which is there to deal with the commonly asked questions, just like yours, dear Esion. It clearly states how to acquire them, where to acquire them and which you´ll acquire.
The 80/20 split - as has already been pointed out by SREvilguy - refers only to common recruits who aren´t noble at all.
Please, if you´re given advise or a helpful link spend the energy on careful reading rather than rage because I tend to hand out acid pretty freely on ignorant people behaving like dicks. The only thing they get spoonfed by me is ego-poison.